Havens Advance as Missile Test Rattles Traders: Markets Wrap

  • North Korea ICBM launch claim spurs gold, yen; oil fluctuates
  • U.S. stock and bond markets are closed for Independence Day

U.S. Confirms North Korea Rocket Was ICBM

A risk-off mood settled over markets on Tuesday, with haven assets including gold and the Japanese yen climbing and stocks slipping in the wake of an apparent milestone in North Korea’s weapons program.

Early market optimism in Asia -- sparked by bullish American economic data yesterday -- gave way after North Korea said it successfully test-fired an intercontinental ballistic missile, moving the state closer to its goal of building a device capable of hitting the continental U.S. Gold headed for its first advance in four days. European stocks edged lower as miners rallied but telecom and utility shares dropped. Oil fluctuated between gains and losses.

Even with U.S. markets shuttered for Independence Day, catalysts seemed to stack up for investors. As North Korea’s missile launch returned focus to the country’s weapons program, profit-taking in Hong Kong sparked yet another selloff, and a data glitch saw erroneous prices of Nasdaq stocks -- including some of the world’s biggest technology companies -- flooding screens.

Investors were also disappointed as Australia’s central bank failed to join global counterparts in ditching their easing bias.

Adair Turner, Jon Moulton and Mark Gilbert discuss the outlook for the global economy and monetary policy.

(Source: Bloomberg)

Read our Markets Live blog here.

Here are some key upcoming events:

  • The Federal Reserve on Wednesday releases the minutes from its June 13-14 policy meeting, at which officials raised interest rates. 
  • Minutes from the latest ECB meeting come a day later.
  • German Chancellor Angela Merkel hosts a two-day G-20 summit in Hamburg beginning Friday. President Donald Trump will attend and is expected to hold his first meeting Putin on the sidelines.
  • American employers probably added around 175,000 workers in June and wage growth probably strengthened, consistent with a solid labor market, economists project the U.S. Labor Department to report on Friday.

These are the main moves in markets:

Currencies

  • The yen rose 0.1 percent to 113.27 per dollar as of 3:58 p.m. in New York. The currency tumbled 0.9 percent on Monday.
  • The Bloomberg Dollar Spot Index was little changed after jumping 0.5 percent in the previous session. The dollar strengthened the most in two weeks Monday after U.S. factories powered up in June at the fastest pace in nearly three years. 
  • The pound fell 0.2 percent to $1.2924 after halting an eight-day rally on Monday. 
  • The euro was 0.2 percent lower at $1.1347.
    The Canadian dollar gained 0.6% to 1.2933 per dollar, a nine-month high.

Stocks

  • The Stoxx Europe 600 Index declined 0.4 percent.
  • Futures on the S&P 500 Index were after the underlying index posted a similar gain on Monday. The U.S. market closed early for the July 4 holiday.

Commodities

  • West Texas Intermediate crude was little changed at $47.08 a barrel before U.S data forecast to show a further pullback in crude stockpiles.
  • Gold rose 0.3 percent to $1,223.69 an ounce, after dropping 1.7 percent on Monday for its biggest loss of the year amid the dollar’s advance.

Bonds

  • The yield on 10-year Treasuries rose five basis points to 2.35 percent on Monday, after surging 16 basis points last week. The market was closed on Tuesday.
  • U.K. 10-year yields fell two basis points to 1.25 percent.

Asia

  • The yen rose as much as 0.5 percent after North Korea’s missile test, rebounding after tumbling 0.9 percent on Monday. The Aussie dollar dropped 0.7 percent, erasing an earlier gain.
  • Hong Kong’s Hang Seng fell 1.5 percent, with Galaxy Entertainment Group Ltd. and Tencent Holdings Ltd. among the biggest losers. Analysts attributed the drop to the selling of index futures after the benchmark fell below 25,500.
  • Australia’s S&P/ASX 200 Index jumped 1.8 percent, the most since Nov. 10, with stocks bouncing back after a two-day slump totaling 2.3 percent. Banks surged 2.2 percent.

— With assistance by Adam Haigh, and Sebastian Boyd

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